Collateralized Bond Obligation

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Collateralized Bond Obligation (CBO)

Investment-grade bonds backed by a collection of junk bonds with different levels of risk, called tiers, that are determined by the quality of junk bond involved. CBOs backed by highly risky junk bonds receive higher interest rates than other CBOs.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Collateralized Bond Obligation

An asset-backed security backed by the receivables on junk bonds. Issuers of CBOs package and sell their receivables on bonds they hold to investors in order to reduce the risk coming from defaults. Returns on CBOs are lower risk than the individual bonds backing them. This is because it is unlikely that all or even most of the junk bonds will default. This makes the collateralized bond obligation investment grade and therefore banks are allowed to invest in them. See also: Collateralized Loan Obligation, Collateralized Mortgage Obligation.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

collateralized bond obligation

A derivative security collateralized by a pool of high-yield bonds. Several classes of these obligations are issued for a single pool of bonds with different classes offering different yields and a different degree of credit risk. Interest and principal repayments received on the bond portfolio are passed through to owners of the derivative securities. Compare collateralized mortgage obligation.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
This limited restructuring makes CBOS suffers more from disability to solve problems of liquidity or imposing measures to help resolve a destabilized monetary system.
He explained that Punjab's CBOs were formed after looking at the success of similar initiatives in Gilgit-Baltistan.
His Excellency Mohammed Saif Al Suwaidi, Director General of ADFD, and Amna Mirgani Hassan, General Manager of the Capital Markets Department of CBOS, signed an agreement confirming the deposit at the Fund's headquarters in Abu Dhabi.
Mohammad Saif Al Suwaidi, Director-General of ADFD, and Amna Mirgani Hassan, General Manager of the Capital Markets Department of CBOS, signed the agreement confirming the deposit, at the fund's headquarters in Abu Dhabi.
"The directive to deposit $250 million into CBOS aligns with the UAE leadership's keenness to support the Sudanese people and economy, as well as help achieve financial stability in the country.
Speaking on the occasion, Al Suwaidi said that the directive to deposit US$250 million into CBOS aligns with the UAE leadership under the directives of the President His Highness Sheikh Khalifa bin Zayed Al Nahyan, and His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, to support Sudanese people and economy, as well as help achieve financial stability in the country.
Several economists have doubted the credibility of the CBoS inflation reports as the bureau last January said inflation has abruptly dropped to 43,45% from 72,9% in December 2018.
It added that the education department should combine efforts with CBOs which were already working for the cause, and pay them the management cost annually.
Earlier, Madius who is also deputy chief minister acknowledged Shell's initiative to empower local NGOs and CBOs, which indirectly would benefit the bigger Sabah community, in line with the state government's aspiration towards sustainable development.
Consider the impact of CBOs on individuals and families.
The table indicates that local NGO or CBOs were fully supported by 18.3 percent of total respondents, 30.6 only favored them, 18.1 percent were undecided and 23 percent were not in support of their role in Peace Building.